2 Communism in Crisis

China under Deng Xiaoping, economic policies and the Four Modernizations

2.2.1 China under Deng Xiaoping

Deng had full control of the Party and the government by 1982

He wanted to make important changes so that China could compete West

He also thought that it was important to start separating the government from the Party as he wanted to put in place policies which would differ from communist ideologies

The goal was to modernise China so that it could compete with the West in consumer goods and industrial production

Even though Deng wanted to put in place Western policies he was still a communist and made sure that the political system remained communist

2.2.2 The Ten Year Plan

Hua Guofeng announced the new Ten Year Plan in 1978

The plan focused on economic sectors with a heavy industry

The goal was to reach a level at which China would be able to support itself and compete with the West

Deng was put in charge of these political changes

The opening up of China to the West by Mao and Zhou was very beneficial to the plan as it provided some of the capital needed for the plan

The plan focused on China's development, especially steel production

Goals where set for natural resource extractions (oil, petroleum, coal and non ferrous-metals)

In addition the plan included extensive infrastructure development which involved electricity, rail roads and water transport

The plan proved to be too ambitious and the government could not afford the costs so in 1979 the goals of the plan were modified

The plan would focus on the Four Modernizations: agriculture, industry, science and technology and the military

2.2.3 Open Door Policy

The Party introduced the Open Door Policy in December 1978

This was a major factor for the success of the Plan and the Four Modernizations

A high level of capital was needed to make the changes and the Open Door Policy provided this capital

Also China would benefit from learning and importing science and technology by trading with the West

China focused on quality of its products, the diversification of its exports, the devaluation of the Yuan and built up its currency reserves

China became very attractive to investors like Japan, West Germany and the United States

2.2.4 Agriculture

The goal was to increase the yields of farmers

The government wanted farmers to move away from traditional farming methods

Instead of manual work the government wanted to introduce mechanised farming

The government wanted to improve water supply to farmers

The government supported and promoted the use of chemical fertilisers

The government supported personal incentives and diversification

There where set quotas

12 commodity and food base areas would be created to allow for better regulation and distribution of food

A big turning point was the implementation of the Household Responsibility System

Under this system even though there was still no private ownership of land, each farming household received a plot of land

The farming households could use this plot of land as they wanted

They would have a contract with the local commune in which they had to hire a certain amount of workers and plant a specific amount of crops

The farming households had control over the labour within their households and could distribute this labour however they wished

Also all farming household surplus could be either sold or kept which was a great benefit to farmers

In exchange for using the land for a period of 15 years a quota that had been predetermined would go back to the local commune

The Household Responsibility System was very successful, by 1989 90% of households where involved in the system

The System alone allowed to increase productivity by more than what had been set by the Ten Year Plan

China became the largest agricultural producer

Agricultural improvements lead to increased productivity

Due to this increased productivity, factories where built and the communes saw the revival of local crafts

This meant that farmers could leave their family plots and work locally in the factories

2.2.5 Industry

The main focus was on capital construction and improving heavy industries

Attention was drawn to steel, iron, coal and oil production, 55 billion Yen was invested into these

There was a total of 120 projects to be completed however the plan proved to be too ambitious and so in 1979 it was readjusted

The Industrial Responsibility System was introduced

Under this system, the supervisory body of a State Owned Enterprise (SOE) would have a contract in which a percentage of the production and/or profit would go to the state and the SOE could keep the surplus, quality of production became a factor in the later stages

This improved the attitude and motivation of industrial workers, increasing productivity

In October 1984 the Resolution on the Reform of the Economic System was introduced

Public ownership was not allowed however the government gave more freedom to enterprises

The management of these enterprises was a lot more free

In doing so the government hoped to increase production

Private groups could lease small enterprises but larger ones remained under the control of the state

2.2.6 Science and Technology

The Cultural Revolution had devastating effects on education

China was lacking even the basic technology that was standard in all other developed countries

There was a need for more scientists, doctors, engineers and architects

A number of goals were put forward

The government wanted to be able to compete with the developing countries my repairing the damages caused by the Cultural Revolution

By 1985 the government wanted to be only ten years behind the developing countries

The goals included to increase the number of scientists, develop the centres used for experiments and to complete a nation wide system of science and technology research

2.2.7 Military

China had the largest army in the world however it seriously lacked in military technology

Nuclear research had come to an end

Science and military modernisation had a direct link

The centres of research that were being either built or improved made it possible to develop new weapons

It was estimated that the government spend up to 10% on developing and buying new technology

2.2.8 Results of the Ten Year Plan

Mixed results, the plan succeeded in some ways but not in others

According to government statistics industrial production and agriculture had an average annual growth of 11%

Growth rates where even higher in the production of coal, steel, electricity and oil

The GNP reached 778 billion in 1985

There was also success in the regions of infrastructure development and construction

There was also tremendous improvements in science and technology

However there were problems with the workforce

Young workers often trained abroad with modern equipment and then had to reintegrate themselves on their return within an outdated system

Also, older workers who had suffered from a lack of education due to the cultural revolution felt threatened by the younger workers as they were scared of unemployment and the younger workers did not respect them as elders

The increased production brought about inflation

The plan focused on modernisation, economic growth and the availability of consumer goods however other issues affecting the quality of life where not payed attention to

Beijing became very polluted and China suffered deforestation on a big scale

The one child policy was put into place which penalised families with more than one child

Corruption occurred as the Party members were spared from the policy

Also, the children of Party members had many benefits, they were automatically accepted into universities and did not have to serve in the military